I don't think there can be a successful packaged bankruptcy of GM. What exactly goes in the package? Is a government determined reorganization really a good idea? There are too many problems with GM for a neat package. Doesn't mean we won't try.
molten_tofu(Unrated) writes: \tForgive the ignorance: what are interest reserves? \t molten_tofu | \t \t \t \t12.18.08 - 12:35 pm | #
Borrow "$X" dollars at y% interest.
Bank then transfer to you $X PLUS (say) 1 years of interest so you don't actually make any interest payments for a year, rather, the bank takes a little bit each month from that interest "reserve". At end of the year, the interest reserve is tapped. You go, buh-bye.
AIG just "discovered" another toxic $30B. So how many more retention bonuses will that lead to? Where's AIG's plan to slash salaries? Maybe another Desert Palms retreat to mull it over? Just as long as GS can hide behind AIG derivitives, Hank and Ben will keep shoveling them Billions. But f--- Detroit and those evil autoworkers?
personal anectdote, my darling wife just got an email. they are closing the music conservatory where she was dean of students and opera director. citing lack of funds. an email.
no financial trauma for us, but feel bad for the students and she'll be home more making lists of things for me to do. ugh.
I'm surprised there isn't more outrage given the sheer lack of willingness and urgency to help the big three (middle america) - whereas AIG gets a figure now approaching $200b.. GS and JPM are all looked after - and still have dough left over to pay bonuses.
Sure GM/F and C are problems.. but aren't they worth at least a gesture?
Things are going to get much worse much quickly than most imagined.
A peak at the Dreier LLC filing shows he owes the landlord almost a million dollars (499 Park Ave) and I am sure it will be a while before they get a new tenant in.
Who anticipates losses like that? Or how about Madoff's operations, occupying three floors (!) of the Lipstick Building . . . I recall that was bought by Israeli investors last year at some ridiculous price . . . their lender's sphincters should be clenching like a high speed camera shutter.
this can only get much worse as everything contracts. There is low demand for borrowing right now. Super low interest rates aren't going to help fill vacant CRE if there's no one to buy what businesses sell.
I think there is just a lot of posturing going on right now. Auto execs/unions are the biggest brinkmanship-negotiators out there, so we see 1. C/GM shutting down for a month 2. Bush talk about bankruptcy.
Everybody is working to cause haircuts. And in the end, everyone will say: See? We avoided bankruptcy. The haircut we took was quite reasonable.
Major face saving will be had by all. The market will rally 500 points.
I'm thinking giant paintball warzones. Try to keep it non-lethal. Think of all the industries that could be supported: paint, manufacturing, apparel, Mountain Dew, deoderant, shampoo, and Pizza Hut.
"no financial trauma for us, but feel bad for the students and she'll be home more making lists of things for me to do. ugh.
serf Alan Greenspend | Homepage | 12.18.08 - 12:40 pm | # "
Serf Alan Greenspend,
I hear there is going to be a glut of cheap CRE for you to rent the wife a classroom.
Does anyone know if there is typically a surge in layoffs after the holiday when times are bad? I mean, do employers put some off that they would otherwise be making now? Can we expect even worse news in 2-4 weeks?
Big 4 accounting firms are making a lot of layoffs right now, which is unusual. It's an industry with bad hours and mediocre pay, but supposedly great job security (due to high voluntary turnover, mostly). If they're laying off, it tells you that their clients (large corps) are cutting too.
S&P, Moody, Fitch: no change/reform/regulation from the fraudent ratings before the crisis.
CDO's still highly leveraged and non-regulated.
CDS still the wild west, no regulation, no unwinding visible.
Banks still leveraged more than previous (before SEC waiver) limit? Seems that way, haven't heard differently.
Trillions spent on useless pumpups (they certainly haven't been bailouts) and Wall Street still doing biz the way that got us into this f*ckup.
How can any rational person believe that this financial system has integrity, and is worthy of deposits/investments. It is just a game for the benefit of the big guys.
You know, the next bubble in real estate (2040?) I'm going to make sure i'm positioned to borrow and build and buy with none of my own skin in the game.
OPM. Live and learn. As long as you don't get greedy and stupid, it seems like a no lose proposition.
thanks CP. i'll have her grab the students and teach them voice here privately for cash.
NOC, actually i was at a meeting of arts organizers working on submitting to a request for proposals for the obama transitition team. my idea was to use CRE spaces as training, and DIY sites for high tech arts. one of our most valuable assets in this country is our creative skillz.
the ARMs resettting arent a problem anymore he is actually kinda bullish (as bullish as i expect he can get) i read the entire piece, waiting for the punchline....and it never came then i thought "is this april 1?"
" serf Alan Greenspend writes:
thanks CP. i'll have her grab the students and teach them voice here privately for cash.
NOC, actually i was at a meeting of arts organizers working on submitting to a request for proposals for the obama transitition team. my idea was to use CRE spaces as training, and DIY sites for high tech arts. one of our most valuable assets in this country is our creative skillz.
off to meetings...
serf Alan Greenspend | Homepage | 12.18.08 - 12:59 pm | # "
Interested in learning more about this. Did I see you at MakerFaire and not know it?
Dick Fuld reportedly spends much of his days allegedly wondering why he didn't get a bailout. He should instead be thanking his lucky stars he is not in jail. Bankruptcy fraud is criminal, and fraudulent conveyance is subject to clawbacks. How could Lehman possibly have been producing financials that showed it had a positive net worth, yet have an over $100 billion hole in its balance sheet when it went under? No one has yet given an adequate answer on where the shortfalls were.
A New York Times story today, "On Wall Street, Bonuses, Not Profits, Were Real," makes its most important point in its headline... glosses over the fundamental nature of what went on.
It was looting, and it is high time the media starts describing it in those terms.
Dick Fuld reportedly spends much of his days allegedly wondering why he didn't get a bailout. He should instead be thanking his lucky stars he is not in jail. Bankruptcy fraud is criminal, and fraudulent conveyance is subject to clawbacks. How could Lehman possibly have been producing financials that showed it had a positive net worth, yet have an over $100 billion hole in its balance sheet when it went under? No one has yet given an adequate answer on where the shortfalls were....
(the IBs) pay themselves more than their firms are worth and then default on their debt obligations." This has happened en masse in what formerly were investment banks who have now become wards of the state...."
Genuine restructuring isn't possible because of political aversion to the loss of large companies and high unemployment.
You could say the process is similar to aging in humans (even though aging occurs by design) - unproductive companies and special interest multiply throughout the economy until it is stifled to the point that it can no longer pay for its operating costs.
This may be the fundamental mechanism by which economies grow old and die (in reality some calamity typically comes along that either destroys the economy outright or cleans out enough of the waste structure that substantial growth can resume once again).
nullpointer(Unrated) writes: \tpop on over and read the latest from mish
the ARMs resettting arent a problem anymore nullpointer | 12.18.08 - 1:00 pm | #
This makes sense, and mirrors something noted here last year - by driving down rates, the FED effectively kicked the can down the road on resets. The infamous Credit Suisse chart showing the tsunami of POA (POS?) loan resets in 09 and 10 (brought to us by the famous undead CFC, WAMU, World/Wachovia, DSL, First Fed, EMC, et al) has been flattened out. Massive resets would lead to massive failure, and were pushed out to the recast date of 60 months for most POAs (except World/Wachovia, many of which have 10 year recasts).
However - the mininum payments will still reset to a fully amortized 25 year variable rate that adjusts monthly. So if borrower "X" was making the min neg-am payment, even a recast at 1 year LIBOR plus 3.4 margin - or about 4% - will still bring a higher payment. And with falling employment, plunging "equity", and negative sentiment - I'm not entirely convinced the problem is gone. Plus, what about next year, when rates rise? So will the payments.
Anybody know whey KB Homes would abandon the Atlanta market? That's what they just announced they'll do upon completion of current projects. I'm thinking maybe lack of land and lack of water is leading to worry that it will be hard to do business. I know I should start with "because business sucks", but that's not specific to Atlanta.
Anybody know whey KB Homes would abandon the Atlanta market? That's what they just announced they'll do upon completion of current projects. I'm thinking maybe lack of land and lack of water is leading to worry that it will be hard to do business. I know I should start with "because business sucks", but that's not specific to Atlanta.
k harris | 12.18.08 - 1:11 pm |
FDIC smoked all the local banks. No one left to make goofy loans there.
ZURICH -- Credit Suisse Group said Thursday it will use its own illiquid assets such as mortgage-securities to pay senior staff at its investment bank year-end bonuses.
The Zurich-based bank plans to pool its illiquid assets such as commercial mortgage-backed securities and leveraged loans it can't sell because demand has seized up, then dole out portions of the entity to managing directors and directors, according to a memorandum made available by a spokesman.
(the IBs) pay themselves more than their firms are worth and then default on their debt obligations." This has happened en masse in what formerly were investment banks who have now become wards of the state...."
mock turtle | 12.18.08 - 1:07 pm | #
It was clear to me at the time that you'd have to be an imbecile to invest in an I-Bank IPO. But people bought them anyway. And then when the PE guys started going public . . . how f'ing stupid do you have to be? I have far more empathy for any Madoff investor than people who bought any of the I-Banks or PE firms as investments.
You are basically begging them to steal your money. The truly criminal enterprise is the media machine that enables it all: CNBC, Forbes, et al.
As Jas says, Gangistan! Crooks robbing Dopes! Dopes love Scams!
1) If you are underwater who cares what your reset it is..you will still walk. If you owe $600k on a $250k house, why stay
2) Many of these people could never afford the home in the first place and they will still not be able to afford the homes...the strawberry picker making $7hr buying a $700k home with a POA is still screwed.
3) If you have a POA and now need to start paying principal...uh that was probably not in your monthly cash flow budget
"This may be the fundamental mechanism by which economies grow old and die (in reality some calamity typically comes along that either destroys the economy outright or cleans out enough of the waste structure that substantial growth can resume once again).
ac | 12.18.08 - 1:09 pm | # "
Since I live in redwood country, I think of redwood trees. If you cut down a redwood cleanly, even a nasty dying one, you get a "fairy ring" of new trees around the old stump, growing up from the root structure; and, eventually, a second-growth patch of forest.
"You know, the next bubble in real estate (2040?) I'm going to make sure i'm positioned to borrow and build and buy with none of my own skin in the game."
Care to guess the title of the top pop tune of 2040?
Wow, this just keeps getting worse. CRE is the next shoe to drop and it will drop hard! Remember, these loans are very large relative to even the more expensive homes.
the point is that not only are many if not most of the IBs "stealing" figuratively speaking, the investors money...
BUT MORE IMPORTANTLY
all the TARP money is being vacuumed up and sequestered and bonuses are being paid to the leadership of failed companies on the public dole ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
The November median sale price - the point where half of the homes sold for more and half for less - stood at its lowest since it was $350,000 in September 2000..
the ARMs resettting arent a problem anymore
nullpointer | 12.18.08 - 1:00 pm | #
I understand the Mish logic here and note that he is still calling for an L-shaped recession.
I think the most likely outcomes are either an L-shaped Japanese style recession or a hyperinflation if the huge idle monetary base comes off the sidelines all at once.
all the TARP money is being vacuumed up and sequestered and bonuses are being paid to the leadership of failed companies on the public dole ! mock turtle | 12.18.08 - 1:26 pm | #
Gubbmint Cheese writes:
I'm surprised there isn't more outrage given the sheer lack of willingness and urgency to help the big three (middle america) - whereas AIG gets a figure now approaching $200b.. GS and JPM are all looked after - and still have dough left over to pay bonuses.
Sure GM/F and C are problems.. but aren't they worth at least a gesture?
Gubbmint Cheese | 12.18.08 - 12:41 pm
The public doesn't want it, and why would they? GM is increasing production in Mexico, China, etc. Why the heck would I want to bail them out?
Next point. Is AIG and company any better? NO! And I don't want to bail them out either!
Exit writes:
I'm thinking giant paintball warzones. Try to keep it non-lethal. Think of all the industries that could be supported: paint, manufacturing, apparel, Mountain Dew, deoderant, shampoo, and Pizza Hut.
Exit | Homepage | 12.18.08 - 12:50 pm | #
You know, I think that may have some possibilities...
Watch your butts, a short term rally is going to appear on your doorsteps. It's name is fear of Obama.... fear of America..... I've bet the rally. It's your choice. Think or die.
I agree Crispy - as much as I like Mish's comments, I think he's off here. What happens when these home owners need to refi into a 'regular' mortgage and get off the subsidized payments bandwagon? Also, as you said.. if you are upside down a few hundred k.. why would you stay? Makes no sense at all..
Wow, I looked up Schumpeter. He voices the exact same criticism I've made regarding economists like Krugman:
Schumpeter criticized John Maynard Keynes and David Ricardo for the "Ricardian vice." According to Schumpeter, Ricardo and Keynes reasoned in terms of abstract models, where they would freeze all but a few variables. Then they could argue that one caused the other in a simple monotonic fashion. This led to the belief that one could easily deduce policy conclusions directly from a highly abstract theoretical model.
My criticism comes from my personal experience moving from theoretical models to the real world circumstances in my profession.
It's interesting to see somebody else voice the exact same objection.
yfactor - I'm not a fan of any bailout either... but if you do something for wall street - It seems to beg some balance to middle america. My only point is - I'm surprised that NOTHING is being done for the big three given the $2T given to Wall St.
"It's interesting to see somebody else voice the exact same objection."
It's easy to frame this historical moment in Schumpeter's terms, in every way, most especially the inevitable transition to socialism.
It fits the times even better than Lenin's square-pegs adaptation of Marx to pre-industrial Russia, and the haze of Friedmanite voodoo which created enough opacity for the wall st vampires to operate in the past two decades.
I'm quickly becoming impressed with this Schumpeter guy:
Schumpeter's theory is that the success of capitalism will lead to a form of corporatism and a fostering of values hostile to capitalism, especially among intellectuals. The intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism... He argued that capitalism's collapse from within will come about as democratic majorities vote for the creation of a welfare state and place restrictions upon entrepreneurship that will burden and destroy the capitalist structure.
Seems like he predicted the future we are living in now.
yfactor - I'm not a fan of any bailout either... but if you do something for wall street - It seems to beg some balance to middle america. My only point is - I'm surprised that NOTHING is being done for the big three given the $2T given to Wall St.
Gubbmint Cheese | 12.18.08 - 1:36 pm
Yes, I understand your point (honestly). But I still don't want anyone bailed out.
Credit Suisse Group said Thursday it will use its own illiquid assets such as mortgage-securities to pay senior staff at its investment bank year-end bonuses.
"THEMIS is a mission to investigate what causes auroras in the Earth's atmosphere to dramatically change from slowly shimmering waves of light to wildly shifting streaks of color."
"Recent satellite observations have revealed the largest breach yet seen in the magnetic field that protects Earth from most of the sun's violent blasts, researchers reported Tuesday. The discovery was made last summer by Themis, a fleet of five small NASA satellites."
"These breaches indicate that during the next period of high solar activity, due to start in 2012, Earth will experience some of the worst solar storms seen in decades."
The coincidence of 2012, large holes in the magnetosphere, NASA launching 5 satellites a few years ago,the weird lack of solar flares, and the long overdue reversal of the geomagnetic polarity leaves me wondering.
The worlds economy collapsing, trillions in paper wealth disappearing and oil dropping precipitously. I'm half waiting for BO to pull a Morgan Freeman(Deep Impact) moment and announce the world wide building of bunkers and a national lottery for entrance.
Starting to get some attention. Google news returned stories.
Credit Suisse Group said Thursday it will use its own illiquid assets such as mortgage-securities to pay senior staff at its investment bank year-end bonuses. c.adejd | 12.18.08 - 1:44 pm | #
I'm not here to dominate the conversation. I am a very Spock kinda guy. My motto is simply to "survive and prosper". I call a short term rally. I'm not standing out as a market leader. The end.
It's easy to frame this historical moment in Schumpeter's terms, in every way, most especially the inevitable transition to socialism.
The Wikipedia article doesn't really make it clear whether Schumpeter is advocating socialism or capitalism. The way it's written sounds like he's trying to promote capitalism by hiding it behind a socialistic message.
Of course the problem with the socialist outcome still remains - we haven't figured out how to motivate people to work in a socialist environment. That leads me to believe that a transition from capitalism to socialism with the operating overhead and debt created by a capitalism economy will fail because the socialist economy will not be able to generate the activity to sustain these costs of operation (because people are less motivated to produce). To me this suggests that in order to sustain itself the government will attempt to compensate by yet another transition, this time to a more coercive authoritarian fascist type state.
" c.adejd writes:
There's a lump of coal in the stocking!
Credit Suisse Group said Thursday it will use its own illiquid assets such as mortgage-securities to pay senior staff at its investment bank year-end bonuses.
c.adejd | 12.18.08 - 1:44 pm | # "
Credit Suisse Group said Thursday it will use its own illiquid assets such as mortgage-securities to pay senior staff at its investment bank year-end bonuses.
c.adejd | 12.18.08 - 1:44 pm | #
You know, I didn't believe it could happen here but we are following the Japan deflationary playbook perfectly here. Outcome should be the same, or worse.
That's why I love this place. The guns n ammo crowd, gold bugs, tin foil hat wearers, and Goldwater-ron Paul worshiping daytraderz all congregAte here.
Please take your pseudoscience over to mish's site; it fits in better with the art bell feel of his crowd.
I have seen alot of talk about a rally comming soon.
Its been nearly unanimous in its call.
In addition to the usual suspects like every pundit on TV, you have bears like Mish, Housing Panic, and even Schiff conceeded we may have seen the stock market lows..(at least in nominal terms)....
My question is....if nearly everyone has presumably bought in anticipation of this comming rally.....why hasn't the rally started in earnest already. We've been treading water for some time. (We went into December at 8800 on the DOW, and hear we sit).
What if you threw a party and no once came?
Who exactly is supposed to come into this market now that presumably everyone who thinks the rally is coming has bought?
I frankly don't think there is as much "money on the side" as everyone thinks.
I know alot of co-workers who contribute to the market. No one, and I mean no one, sold. I am the only one I know of who went all cash.
"You can sort of compare [the situation] to a gas stove," Raeder said, "If you turn on the gas and you light it right away, nothing will happenthe gas stove will go on and there will be a flame. But if you turn on a gas stove and you don't do anything for a while and then you throw in a match, what will happen? It will say, Boom!"
I here you badgerboy but read the National Geo article. Here's the excerpt from some physics professor nut job who helped model the simulations. This is what got my attention:
The models showed that the likely driver is north-facing field lines connecting with Earth's magnetosphere, said Jimmy Raeder, a physicist at the University of New Hampshire in Durham who helped build the simulations.
As a field line approaches, it latches onto the poles and wraps around the planet like an octopus using a tentacle to snare its prey, he said.
The latching, known as magnetic reconnection, tears huge cracks in the magnetosphere and allows solar plasma to leak in.
"We have other observations from other satellites that this reconnection process happens over the poles at times, but we had never appreciated what it actually does," Raeder said.
A thicker layer of solar particles, however, isn't enough by itself to create geomagnetic troubles for Earth.
Right now the planet is enjoying a period of low activity called solar minimum. But particles have been building up inside the magnetosphere as the solar wind carries northward-facing field lines to Earth.
During the next solar cycle, the winds are expected to carry southward-facing field lines, which connect with the magnetosphere in such a way that they provide extra charge to any plasma inside the shield.
"You can sort of compare [the situation] to a gas stove," Raeder said.
"If you turn on the gas and you light it right away, nothing will happenthe gas stove will go on and there will be a flame.
"But if you turn on a gas stove and you don't do anything for a while and then you throw in a match, what will happen? It will say, Boom!"
Commercial real estate is way overbuilt. Stupidly so. I live in the NYC metro area and I'm literally tripping over retail and commercial space.
Home Depots, Loews, Staples, Office Depot, Walmarts, Costcos, Dicks, car dealerships, restaurants, self storage, etc. It's insane. Miles and miles of retail lining both sides of Rtes. 22, 10, 1, 17, 4, 124, 3, 9, etc.
All supported by an aging and tapped out middle class with declining real incomes.
donna writes:
I long ago determined that every democracy grows up to be socially democratic in the end.
Time for America to grow up already, and give up the fantasies that we are all so individually superior that we don't have to take care of each other.
donna | Homepage | 12.18.08 - 1:40 pm | #
I would have opposed this when I was young, and captivated by Ayn Rand. She often referred to a "fallacy of the stolen concept" in epistemology, and that had a big effect on me. But in the field of political philosophy, I think she committed an analogous error, of co-opting the unearned, a "fallacy of the stolen socio-economic context". I did not begin from ground zero, reinventing the wheel. My efforts were made standing on a ground that was prepared for me and maintained by the labor of others. I think it is an enormous hole in her system to consider that a "given". She was a great thinker, yes. But this reminds me of a quote I saw today: Embrace those searching for truth; flee from those who've found it. Vaclav Havel.
So, I accept your argument.
I love it how they the narrowed loss...Don't they have a 13 run rule or anything?
Amazing they are around...
LEN 10.13, -0.12, -1.2% reported a net loss of $811 million, or $5.12 a share, narrower than its loss of $1.25 billion, or $7.92 a share, in the year-earlier quarter. The stock was down more than 1% in afternoon trade.
yagij writes: ForEx Question: USD is up and up against the JPY. Did the BoJ finally get around to sinking their currency again?
yagij | 12.18.08 - 1:28 pm | #
U$D/JPY has had five 200 point rallies in 30 days and is just back to the parabolic fall line.
Here we go with Covered Bonds being pumped, in anticipation of massive GSE pools of liquidity being prepped for a tsunami of GSE/Fannie swapping and substitutions, pushing the old peas under new shells and re-packaging fraud loans that are being put into short term bills, while these Covered Bond entities are placed into position to become Giant Depends-like Tampons:
The rating action is taken as a result of a completed review of documents relating to the transfer of the program from Washington Mutual Bank (WMB) to JPMorgan Chase Bank, National Association (JPM) whose Long-term Issuer Default Rating (IDR) is 'AA-' by Fitch, a revision of WMCBP's Discontinuity Factor (D-Factor) to 100% from 24.6%, and the contractual minimum overcollateralization (OC) of 49.3% between the cover pool and the covered bonds.
We cannot end up like Japan--they manufacture and export more than they consume, we just consume. Keeping their currency cheap helped them, will destroy us. We will never get out of the hole being dug--and secretly, or openly, we know it. The empire has been destroyed in 28 years--Reaganomics is the cause of death.
"How are the assets being valued? Mark to model or Mark to market?"
Wouldn't the fairest solution be to give each banker a full bonus with the assets marked to face-value or par or whatever produces the highest current valuation? That way, the degree to which the bonus turns out to be lower than what the banker expected to earn will be the same as the degree to which the assets failed to perform as promised.
OT but just heard on CNBC that the NAIC (National Assn of Insurance Commissioners) is recommending that life insurance carriers (read Met Life, etc.) be allowed to have looser limits on capital reserves so that don't have to have quite so much on hand to cover losses.
donna writes:
I long ago determined that every democracy grows up to be socially democratic in the end.
Time for America to grow up already, and give up the fantasies that we are all so individually superior that we don't have to take care of each other.
donna | Homepage | 12.18.08 - 1:40 pm | #
I'm all for that, but the question is how and if it can be done in practice in the way that people visualize.
It's all well and good to say that we should do this.
My fear though is that we're going to create a system based on what we should do and not what we are willing to do.
If we attempt to base our economy on a theoretical human nature that doesn't exist, then I think that economy will fail.
Credit Suisse Group said Thursday it will use its own illiquid assets such as mortgage-securities to pay senior staff at its investment bank year-end bonuses.
Now we have two things to be grateful to Credit-Suisse for:
The Chart
One of the cleverest plays in economic justice we've seen to date.
My only point is - I'm surprised that NOTHING is being done for the big three given the $2T given to Wall St.
They see BK'ing the Big 3 as a way to destroy a major union. It's no more complicated than that.
What the public wants in this case is irrelevant, just as it was irrelevant when the equally unpopular $700 billion was passed. Let's not pretend that the views of the average guy matter.
IMO, the convincing bounce off of 920 is bearish. I also expect retail and jobs to surprise on the down-side. Mr. Market has also not priced in Bush's orderly bk. When has any bush plan turned out to be orderly?
What the public wants in this case is irrelevant, just as it was irrelevant when the equally unpopular $700 billion was passed. Let's not pretend that the views of the average guy matter.
Truer words have never been spoken. Anyway, nothing to see here folks, move along...
My job does not include converting any of you to my view of the market. I will take your cash at such times as I deem appropriate, but y'all buy into whichever fiat currency as meets your fashion.
Popeye calls B.S. on all of you. You are all sleep walking.
That 'lil sweetheart Louise says Dow 6400. I take her advice. She is part japanese and vows seppuku if wrong.
You may have my topknot if does not come to be...in 30 years.
Re: My only point is - I'm surprised that NOTHING is being done for the big three given the $2T given to Wall St.
I think you also have to realize that the BIG three are a BIG part of Wall Street banking with ABS-related to derivatives, so the Wall Street bailout does flow into these ABS IMHO.
"(the IBs) pay themselves more than their firms are worth and then default on their debt obligations."
The public 'tell' on this one came when Lehman went down: employees could have pooled last year's bonus money and bought the entire firm on the cheap, but they did nothing.
sdtfs writes: "I'm surprised no one has figured how many cars we're going to need and how many factories it will take to produce that number."
A similar exercise could be performed for the number of loans, IPOs, SIVs, and so forth that we will need, and the number of investment banks that it will take to produce that number.
Although, come to think of it, there is an asymmetry; the car factories keep making cars, even though no one is buying, but the banks show no signs of making loans even where there is demand.
REBear writes: "How are the [Credit Suisse bonus] assets being valued? Mark to model or Mark to market?"
That is undoubtedly the question that the income tax people are asking.
It seems to put the executives in a dilemma; claiming the assets are worth a lot means they have a large personal tax liability, but reassures the market about the firm's health; while the opposite does, well, the opposite.
ac writes: "If we attempt to base our economy on a theoretical human nature that doesn't exist, then I think that economy will fail."
This explains everything. Our economy is based on the assumption that humans are rational; yet experiments show that humans do not behave rationally, in even the simplest sorts of economic games.
I'm still wondering why a bailout from the Big 3 by oil companies hasn't happened? Oil companies have made a mint off of American car companies, it'a relationship that's gone back decades.
A few of the above comments argue that financial assets were considerably overvalued. This isn't suprising since even hard assets (like cars) are still being overproduced.
This is rhetorical, but how many people here really think a loan to Big 3 actually will make them solvent? GM has over $100 B in loans coming due in the next couple of years....
sigh
They probably just started reading CR yesterday.
Lightning crashes... an old mother dies..
3rd!
Bush admin considering packaged BK for auto makers - Yahoo.
Maybe someone has been reading here and has seen Dryfly's advice.
So: Is there a reserve "burnout" chart? (Like the recast charts for residential?)
I don't think there can be a successful packaged bankruptcy of GM. What exactly goes in the package? Is a government determined reorganization really a good idea? There are too many problems with GM for a neat package. Doesn't mean we won't try.
Forgive the ignorance: what are interest reserves?
interest reserves - you use the bank loan to make payments on the loa
molten_tofu(Unrated) writes:
\tForgive the ignorance: what are interest reserves?
\t molten_tofu | \t \t \t \t12.18.08 - 12:35 pm | #
Borrow "$X" dollars at y% interest.
Bank then transfer to you $X PLUS (say) 1 years of interest so you don't actually make any interest payments for a year, rather, the bank takes a little bit each month from that interest "reserve". At end of the year, the interest reserve is tapped. You go, buh-bye.
AIG just "discovered" another toxic $30B. So how many more retention bonuses will that lead to? Where's AIG's plan to slash salaries? Maybe another Desert Palms retreat to mull it over? Just as long as GS can hide behind AIG derivitives, Hank and Ben will keep shoveling them Billions. But f--- Detroit and those evil autoworkers?
personal anectdote, my darling wife just got an email. they are closing the music conservatory where she was dean of students and opera director. citing lack of funds. an email.
no financial trauma for us, but feel bad for the students and she'll be home more making lists of things for me to do. ugh.
I'm surprised there isn't more outrage given the sheer lack of willingness and urgency to help the big three (middle america) - whereas AIG gets a figure now approaching $200b.. GS and JPM are all looked after - and still have dough left over to pay bonuses.
Sure GM/F and C are problems.. but aren't they worth at least a gesture?
Interesting times indeed.
re GM & AIG
I think the two are linked: prepack a BK for GM and use AIG as a front for the Treasury to protect any CDS-holders that might otherwise get hurt.
Things are going to get much worse much quickly than most imagined.
A peak at the Dreier LLC filing shows he owes the landlord almost a million dollars (499 Park Ave) and I am sure it will be a while before they get a new tenant in.
Who anticipates losses like that? Or how about Madoff's operations, occupying three floors (!) of the Lipstick Building . . . I recall that was bought by Israeli investors last year at some ridiculous price . . . their lender's sphincters should be clenching like a high speed camera shutter.
Sure GM/F and C are problems.. but aren't they worth at least a gesture?
Interesting times indeed.
\t Gubbmint Cheese | \t \t \t \t12.18.08 - 12:41 pm | #
Oh, they got a gesture, all right.
Lol exit.
this can only get much worse as everything contracts. There is low demand for borrowing right now. Super low interest rates aren't going to help fill vacant CRE if there's no one to buy what businesses sell.
SAG, sorry to hear that. Maybe she can start a website on her expert area? Should keep her busy.
@Exit: LMAO!
I think there is just a lot of posturing going on right now. Auto execs/unions are the biggest brinkmanship-negotiators out there, so we see
1. C/GM shutting down for a month
2. Bush talk about bankruptcy.
Everybody is working to cause haircuts. And in the end, everyone will say: See? We avoided bankruptcy. The haircut we took was quite reasonable.
Major face saving will be had by all. The market will rally 500 points.
Pacific Gas and Electric Co's California Gas Transmission unit on Thursday issued an operational flow order for Friday for all customers on its natural gas pipeline system due to low inventories.
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
I'm thinking giant paintball warzones. Try to keep it non-lethal. Think of all the industries that could be supported: paint, manufacturing, apparel, Mountain Dew, deoderant, shampoo, and Pizza Hut.
"no financial trauma for us, but feel bad for the students and she'll be home more making lists of things for me to do. ugh.
serf Alan Greenspend | Homepage | 12.18.08 - 12:40 pm | # "
Serf Alan Greenspend,
I hear there is going to be a glut of cheap CRE for you to rent the wife a classroom.
Does anyone know if there is typically a surge in layoffs after the holiday when times are bad? I mean, do employers put some off that they would otherwise be making now? Can we expect even worse news in 2-4 weeks?
Big 4 accounting firms are making a lot of layoffs right now, which is unusual. It's an industry with bad hours and mediocre pay, but supposedly great job security (due to high voluntary turnover, mostly). If they're laying off, it tells you that their clients (large corps) are cutting too.
GMAC debt swap falls short:
GMAC Swap Remains Short of Goal as Pimco Holds Out (Update1) - Bloomberg.com
S&P, Moody, Fitch: no change/reform/regulation from the fraudent ratings before the crisis.
CDO's still highly leveraged and non-regulated.
CDS still the wild west, no regulation, no unwinding visible.
Banks still leveraged more than previous (before SEC waiver) limit? Seems that way, haven't heard differently.
Trillions spent on useless pumpups (they certainly haven't been bailouts) and Wall Street still doing biz the way that got us into this f*ckup.
How can any rational person believe that this financial system has integrity, and is worthy of deposits/investments. It is just a game for the benefit of the big guys.
crispy - can't they just throw in some cars as 'boot' to balance out the equity? I'm pretty sure they have plenty to spare.
Oh my, the 13 week yeilding -.05. Wow.
How much GMAC does Pimco hold? Anyone?
You know, the next bubble in real estate (2040?) I'm going to make sure i'm positioned to borrow and build and buy with none of my own skin in the game.
OPM. Live and learn. As long as you don't get greedy and stupid, it seems like a no lose proposition.
Yum, another injection of zombie juice.
Serf
the lack of professionalism in many areas astounds me.
You tell someone they are out of a job via email?
I only had to lay someone off once. I did it in person. It wasn't pleasant but that is the point, isn't it?
This should further push SRS into the dumps, I am sure. How could it be otherwise?
Edgar Report for PIMCO
Happy hunting.
Gubbmint Cheese(Unrated) writes:
\tHow much GMAC does Pimco hold? Anyone?
\t Gubbmint Cheese | \t \t \t \t12.18.08 - 12:55 pm | #
Gubbmint Cheese | 12.18.08 - 12:55 pm | #
thanks CP. i'll have her grab the students and teach them voice here privately for cash.
NOC, actually i was at a meeting of arts organizers working on submitting to a request for proposals for the obama transitition team. my idea was to use CRE spaces as training, and DIY sites for high tech arts. one of our most valuable assets in this country is our creative skillz.
off to meetings...
pop on over and read the latest from mish
the ARMs resettting arent a problem anymore
he is actually kinda bullish (as bullish as i expect he can get)
i read the entire piece, waiting for the punchline....and it never came
then i thought "is this april 1?"
Mish's Global Economic Trend Analysis: ARMs Reset Problem Vanishes Into Thin Air
" serf Alan Greenspend writes:
thanks CP. i'll have her grab the students and teach them voice here privately for cash.
NOC, actually i was at a meeting of arts organizers working on submitting to a request for proposals for the obama transitition team. my idea was to use CRE spaces as training, and DIY sites for high tech arts. one of our most valuable assets in this country is our creative skillz.
off to meetings...
serf Alan Greenspend | Homepage | 12.18.08 - 12:59 pm | # "
Interested in learning more about this. Did I see you at MakerFaire and not know it?
Circuit City breaking leases. Sorry if already posted.
Now is a great time to buy or sell a mall, yes?
Business Week Online > File Not Found
This has to be the news of the day. Very clever...
Credit Suisse to Use Illiquid Assets to Pay Bonuses
Credit Suisse to Use Illiquid Assets to Pay Bonuses (Update1) - Bloomberg.com
Dick Fuld reportedly spends much of his days allegedly wondering why he didn't get a bailout. He should instead be thanking his lucky stars he is not in jail. Bankruptcy fraud is criminal, and fraudulent conveyance is subject to clawbacks. How could Lehman possibly have been producing financials that showed it had a positive net worth, yet have an over $100 billion hole in its balance sheet when it went under? No one has yet given an adequate answer on where the shortfalls were.
ullpointer | 12.18.08 - 1:00 pm | #
But as Tanta pointed out on numerous occasions, it is not the resetting but the recasting that will blow up most of these ARMs.
The Option ARMs, any way.
Yves Smith
over at naked capitalism
is on fire
A New York Times story today, "On Wall Street, Bonuses, Not Profits, Were Real," makes its most important point in its headline... glosses over the fundamental nature of what went on.
It was looting, and it is high time the media starts describing it in those terms.
Dick Fuld reportedly spends much of his days allegedly wondering why he didn't get a bailout. He should instead be thanking his lucky stars he is not in jail. Bankruptcy fraud is criminal, and fraudulent conveyance is subject to clawbacks. How could Lehman possibly have been producing financials that showed it had a positive net worth, yet have an over $100 billion hole in its balance sheet when it went under? No one has yet given an adequate answer on where the shortfalls were....
(the IBs) pay themselves more than their firms are worth and then default on their debt obligations." This has happened en masse in what formerly were investment banks who have now become wards of the state...."
gary-
off to read the tanta piece now.
worth noting: when i googled "arm recast reset" tanta's peice was the first search result
Calculated Risk: Reset Vs. Recast, Or Why Charts Don't Match
tanta vive!
OK you SRS guru's, is the time right to get back in?
OK you SRS guru's, is the time right to get back in?
JohnnyReb | 12.18.08 - 1:08 pm | #
Yes, unless it's going lower.
Yum, another injection of zombie juice.
Genuine restructuring isn't possible because of political aversion to the loss of large companies and high unemployment.
You could say the process is similar to aging in humans (even though aging occurs by design) - unproductive companies and special interest multiply throughout the economy until it is stifled to the point that it can no longer pay for its operating costs.
This may be the fundamental mechanism by which economies grow old and die (in reality some calamity typically comes along that either destroys the economy outright or cleans out enough of the waste structure that substantial growth can resume once again).
This should further push SRS into the dumps
SRS up 6.5% today....
Bad news means market increases: bad is good.
nullpointer(Unrated) writes:
\tpop on over and read the latest from mish
the ARMs resettting arent a problem anymore
nullpointer | 12.18.08 - 1:00 pm | #
This makes sense, and mirrors something noted here last year - by driving down rates, the FED effectively kicked the can down the road on resets. The infamous Credit Suisse chart showing the tsunami of POA (POS?) loan resets in 09 and 10 (brought to us by the famous undead CFC, WAMU, World/Wachovia, DSL, First Fed, EMC, et al) has been flattened out. Massive resets would lead to massive failure, and were pushed out to the recast date of 60 months for most POAs (except World/Wachovia, many of which have 10 year recasts).
However - the mininum payments will still reset to a fully amortized 25 year variable rate that adjusts monthly. So if borrower "X" was making the min neg-am payment, even a recast at 1 year LIBOR plus 3.4 margin - or about 4% - will still bring a higher payment. And with falling employment, plunging "equity", and negative sentiment - I'm not entirely convinced the problem is gone. Plus, what about next year, when rates rise? So will the payments.
Kicked the can down the road, that's all.
Off topic --
Anybody know whey KB Homes would abandon the Atlanta market? That's what they just announced they'll do upon completion of current projects. I'm thinking maybe lack of land and lack of water is leading to worry that it will be hard to do business. I know I should start with "because business sucks", but that's not specific to Atlanta.
Anybody know whey KB Homes would abandon the Atlanta market? That's what they just announced they'll do upon completion of current projects. I'm thinking maybe lack of land and lack of water is leading to worry that it will be hard to do business. I know I should start with "because business sucks", but that's not specific to Atlanta.
k harris | 12.18.08 - 1:11 pm |
FDIC smoked all the local banks. No one left to make goofy loans there.
Bad news for Credit Suisse bankers who are getting their bonuses in MBS -
Credit Suisse to Use Illiquid Instruments to Pay Bonuses
ZURICH -- Credit Suisse Group said Thursday it will use its own illiquid assets such as mortgage-securities to pay senior staff at its investment bank year-end bonuses.
The Zurich-based bank plans to pool its illiquid assets such as commercial mortgage-backed securities and leveraged loans it can't sell because demand has seized up, then dole out portions of the entity to managing directors and directors, according to a memorandum made available by a spokesman.
OT:
Anecdotal numbers for the Phoenix, AZ new care dealers are brutal. Sales are between 4 and 6 percent of last year.
JimPortlandOR writes:
This should further push SRS into the dumps
SRS up 6.5% today....
Bad news means market increases: bad is good.
JimPortlandOR | 12.18.08 - 1:09 pm | #
JIM: I was kidding, though I am now conditioned to expect illogical market responses.
(the IBs) pay themselves more than their firms are worth and then default on their debt obligations." This has happened en masse in what formerly were investment banks who have now become wards of the state...."
mock turtle | 12.18.08 - 1:07 pm | #
It was clear to me at the time that you'd have to be an imbecile to invest in an I-Bank IPO. But people bought them anyway. And then when the PE guys started going public . . . how f'ing stupid do you have to be? I have far more empathy for any Madoff investor than people who bought any of the I-Banks or PE firms as investments.
You are basically begging them to steal your money. The truly criminal enterprise is the media machine that enables it all: CNBC, Forbes, et al.
As Jas says, Gangistan! Crooks robbing Dopes! Dopes love Scams!
OK you SRS guru's, is the time right to get back in?
It's a better time to get in than when it was at 300.
my JNK is mitigating some of the ongoing disaster that is the groupthink here (TBT DXO).
still quite cheap.
Problem with Mish post -
1) If you are underwater who cares what your reset it is..you will still walk. If you owe $600k on a $250k house, why stay
2) Many of these people could never afford the home in the first place and they will still not be able to afford the homes...the strawberry picker making $7hr buying a $700k home with a POA is still screwed.
3) If you have a POA and now need to start paying principal...uh that was probably not in your monthly cash flow budget
"Anecdotal numbers"
that's why I can't get too bullish. the employees outnumbered the customers at the grocery store this morning.
Tanta would rightly kick my a** for mangling recast and reset.
Tanta Vive!
"This may be the fundamental mechanism by which economies grow old and die (in reality some calamity typically comes along that either destroys the economy outright or cleans out enough of the waste structure that substantial growth can resume once again).
ac | 12.18.08 - 1:09 pm | # "
Since I live in redwood country, I think of redwood trees. If you cut down a redwood cleanly, even a nasty dying one, you get a "fairy ring" of new trees around the old stump, growing up from the root structure; and, eventually, a second-growth patch of forest.
Works best if you cut down the old tree, though.
"This may be the fundamental mechanism"
Schumpeter
"You know, the next bubble in real estate (2040?) I'm going to make sure i'm positioned to borrow and build and buy with none of my own skin in the game."
Care to guess the title of the top pop tune of 2040?
What do nanobots and cyborgs like to sing?
topically off-topic
Page not found - - CNBC.com
wheres my MEW?
correction
i failed to put opening quotes at the beginning...the excellent words are from naked capitalism except my few word intro
man, they are flat out crushing the VIX.
Wow, this just keeps getting worse. CRE is the next shoe to drop and it will drop hard! Remember, these loans are very large relative to even the more expensive homes.
DQ Custom ReportsLatest ReleaseD
Paging MiMi - the fortress is in danger
Bay Area...timberrrrrrrrrrrrrrrrrrrr
Gary
the point is that not only are many if not most of the IBs "stealing" figuratively speaking, the investors money...
BUT MORE IMPORTANTLY
all the TARP money is being vacuumed up and sequestered and bonuses are being paid to the leadership of failed companies on the public dole ! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
The November median sale price - the point where half of the homes sold for more and half for less - stood at its lowest since it was $350,000 in September 2000..
8 years wiped out!
nullpointer writes:
the ARMs resettting arent a problem anymore
nullpointer | 12.18.08 - 1:00 pm | #
I understand the Mish logic here and note that he is still calling for an L-shaped recession.
I think the most likely outcomes are either an L-shaped Japanese style recession or a hyperinflation if the huge idle monetary base comes off the sidelines all at once.
Pavel Chichikov(Excellent) writes:
What do nanobots and cyborgs like to sing?
Shriekback.
all the TARP money is being vacuumed up and sequestered and bonuses are being paid to the leadership of failed companies on the public dole !
mock turtle | 12.18.08 - 1:26 pm | #
Yeah... and this is surprising, in what way?
citing lack of funds. an email.
serf Alan Greenspend | Homepage | 12.18.08 - 12:40 pm | #
An e-mail? That was cold.
ForEx Question: USD is up and up against the JPY. Did the BoJ finally get around to sinking their currency again?
the media is complicit in this theft
i dont watch tv all that often
two nights ago, seattle stations
no discussion of fed and ZIRP
and not one single stinkin story about either of the two wars
the people are being treated like mushrooms
fed bull twit and kept in the dark
fed bull twit and kept in the dark
mock turtle | 12.18.08 - 1:28 pm | #
That's the way people want to be treated. Too depressing otherwise.
Gubbmint Cheese writes:
I'm surprised there isn't more outrage given the sheer lack of willingness and urgency to help the big three (middle america) - whereas AIG gets a figure now approaching $200b.. GS and JPM are all looked after - and still have dough left over to pay bonuses.
Sure GM/F and C are problems.. but aren't they worth at least a gesture?
Gubbmint Cheese | 12.18.08 - 12:41 pm
The public doesn't want it, and why would they? GM is increasing production in Mexico, China, etc. Why the heck would I want to bail them out?
Next point. Is AIG and company any better? NO! And I don't want to bail them out either!
my JNK is mitigating some of the ongoing disaster that is the groupthink here (TBT DXO).
Having been here for a while, I've found some of the better trading opportunities occur when the groupthink here capitulates.
Eric, I know people that refuse to watch the news now for just that reason...
Exit writes:
I'm thinking giant paintball warzones. Try to keep it non-lethal. Think of all the industries that could be supported: paint, manufacturing, apparel, Mountain Dew, deoderant, shampoo, and Pizza Hut.
Exit | Homepage | 12.18.08 - 12:50 pm | #
You know, I think that may have some possibilities...
Watch your butts, a short term rally is going to appear on your doorsteps. It's name is fear of Obama.... fear of America..... I've bet the rally. It's your choice. Think or die.
I agree Crispy - as much as I like Mish's comments, I think he's off here. What happens when these home owners need to refi into a 'regular' mortgage and get off the subsidized payments bandwagon? Also, as you said.. if you are upside down a few hundred k.. why would you stay? Makes no sense at all..
Wow, I looked up Schumpeter. He voices the exact same criticism I've made regarding economists like Krugman:
Schumpeter criticized John Maynard Keynes and David Ricardo for the "Ricardian vice." According to Schumpeter, Ricardo and Keynes reasoned in terms of abstract models, where they would freeze all but a few variables. Then they could argue that one caused the other in a simple monotonic fashion. This led to the belief that one could easily deduce policy conclusions directly from a highly abstract theoretical model.
My criticism comes from my personal experience moving from theoretical models to the real world circumstances in my profession.
It's interesting to see somebody else voice the exact same objection.
Think or die - how much more can collapse ?? Logic works if you give it a chance.
If they walk away do they suffer a negative on their credit rating?
yfactor - I'm not a fan of any bailout either... but if you do something for wall street - It seems to beg some balance to middle america. My only point is - I'm surprised that NOTHING is being done for the big three given the $2T given to Wall St.
Think or die - how much more can collapse ?? Logic works if you give it a chance.
<i>Having been here for a while, I've found some of the better trading opportunities occur when the groupthink here capitulates.</i>
can you all please capitulate and bail out of DXO
baby needs a new pair of shoes
Think or die - how much more can collapse ??
P/E ratios, for starters
Popeye - what would you call what has happened since Nov 20th?
i don't want to die so I'm trying to think.
"It's interesting to see somebody else voice the exact same objection."
It's easy to frame this historical moment in Schumpeter's terms, in every way, most especially the inevitable transition to socialism.
It fits the times even better than Lenin's square-pegs adaptation of Marx to pre-industrial Russia, and the haze of Friedmanite voodoo which created enough opacity for the wall st vampires to operate in the past two decades.
I'm quickly becoming impressed with this Schumpeter guy:
Schumpeter's theory is that the success of capitalism will lead to a form of corporatism and a fostering of values hostile to capitalism, especially among intellectuals. The intellectual and social climate needed to allow entrepreneurship to thrive will not exist in advanced capitalism... He argued that capitalism's collapse from within will come about as democratic majorities vote for the creation of a welfare state and place restrictions upon entrepreneurship that will burden and destroy the capitalist structure.
Seems like he predicted the future we are living in now.
"can you all please..."
i think DXO really is the gnat on the elephant that has zero effect on the underlying entity.
not 100% sure about that in terms of SRS, where the tail may in fact have an effect on the og.
"It's easy to frame this historical moment in Schumpeter's terms, in every way, most especially the inevitable transition to socialism."
I long ago determined that every democracy grows up to be socially democratic in the end.
Time for America to grow up already, and give up the fantasies that we are all so individually superior that we don't have to take care of each other.
My only point is - I'm surprised that NOTHING is being done for the big three given the $2T given to Wall St.
Gubbmint Cheese | 12.18.08 - 1:36 pm | #
I'm surpreised no one has figured how many cars we're going to need and how many factories it will take to produce that number.
Popeye(Unrated) writes:
Think or die - how much more can collapse ??
Look at the yield curve amigo, ole Yellowstone Crater there sure is getting some odd humps and bumps.
yfactor - I'm not a fan of any bailout either... but if you do something for wall street - It seems to beg some balance to middle america. My only point is - I'm surprised that NOTHING is being done for the big three given the $2T given to Wall St.
Gubbmint Cheese | 12.18.08 - 1:36 pm
Yes, I understand your point (honestly). But I still don't want anyone bailed out.
There's a lump of coal in the stocking!
Credit Suisse Group said Thursday it will use its own illiquid assets such as mortgage-securities to pay senior staff at its investment bank year-end bonuses.
The last Black Swan event?
"THEMIS is a mission to investigate what causes auroras in the Earth's atmosphere to dramatically change from slowly shimmering waves of light to wildly shifting streaks of color."
5 satellites, cost 173 million
NASA -
THEMIS Mission Site
"Recent satellite observations have revealed the largest breach yet seen in the magnetic field that protects Earth from most of the sun's violent blasts, researchers reported Tuesday. The discovery was made last summer by Themis, a fleet of five small NASA satellites."
The article requested is no longer available.
"These breaches indicate that during the next period of high solar activity, due to start in 2012, Earth will experience some of the worst solar storms seen in decades."
Magnetic-Shield Cracks Found; Big Solar Storms Expected
The coincidence of 2012, large holes in the magnetosphere, NASA launching 5 satellites a few years ago,the weird lack of solar flares, and the long overdue reversal of the geomagnetic polarity leaves me wondering.
The worlds economy collapsing, trillions in paper wealth disappearing and oil dropping precipitously. I'm half waiting for BO to pull a Morgan Freeman(Deep Impact) moment and announce the world wide building of bunkers and a national lottery for entrance.
Starting to get some attention. Google news returned stories.
Google News
Credit Suisse Group said Thursday it will use its own illiquid assets such as mortgage-securities to pay senior staff at its investment bank year-end bonuses.
c.adejd | 12.18.08 - 1:44 pm | #
"I got a rock".
mock turtle | 12.18.08 - 1:26 pm | #
Oh I get it mock.
We are being fleeced and these scumbags can not be allowed to get away with this.
And agreed, the finance media are largely the aiders and abetters of this fraud and thievery.
One reason CR is so popular . . . all of the corporate media is shill-icious.
I'm not here to dominate the conversation. I am a very Spock kinda guy. My motto is simply to "survive and prosper". I call a short term rally. I'm not standing out as a market leader. The end.
It's easy to frame this historical moment in Schumpeter's terms, in every way, most especially the inevitable transition to socialism.
The Wikipedia article doesn't really make it clear whether Schumpeter is advocating socialism or capitalism. The way it's written sounds like he's trying to promote capitalism by hiding it behind a socialistic message.
Of course the problem with the socialist outcome still remains - we haven't figured out how to motivate people to work in a socialist environment. That leads me to believe that a transition from capitalism to socialism with the operating overhead and debt created by a capitalism economy will fail because the socialist economy will not be able to generate the activity to sustain these costs of operation (because people are less motivated to produce). To me this suggests that in order to sustain itself the government will attempt to compensate by yet another transition, this time to a more coercive authoritarian fascist type state.
Popeye(Unrated) writes:
Think or die - how much more can collapse
When people ask me how much more the market could go down, I refer them to this graph for some historical perspective.
This
" c.adejd writes:
There's a lump of coal in the stocking!
Credit Suisse Group said Thursday it will use its own illiquid assets such as mortgage-securities to pay senior staff at its investment bank year-end bonuses.
c.adejd | 12.18.08 - 1:44 pm | # "
Justice at last.
"due to start in 2012"
Of course, according to the Mayan calendar, the world ends in 2012.
As my tour guide in the jungle on the border of Belize/Guatemala said ad nauseum, "Those Mayan people, were SO smart . . . "
Food for thought . . . and terror.
Credit Suisse Group said Thursday it will use its own illiquid assets such as mortgage-securities to pay senior staff at its investment bank year-end bonuses.
c.adejd | 12.18.08 - 1:44 pm | #
"I got a rock".
Eric | 12.18.08 - 1:45 pm |
I got a "Happy Fun Ball".
/SNL
You know, I didn't believe it could happen here but we are following the Japan deflationary playbook perfectly here. Outcome should be the same, or worse.
"I got a rock."
Awesome
http://a3.vox.com/6a00ccff84d126985d00cd96f7b2a34cd5-200pi
"The way it's written sounds like he's trying to promote capitalism by hiding it behind a socialistic message."
JS was unusual insofar as his take wasn't driven by an agenda which the data was made to subsequently fit, like Marx, Friedman, Keynes, etc.
Maybe that's why his ideas and projections have held up so well.
Eric:
I got a rock.
My kids watch that video almost every day. Perfect.
Popeye(Unrated) writes:
Think or die - how much more can collapse
12th Percentile,
Given your name we stands at odds from each other. I've said my peace.
The chips fall....
Tintingruth,
That's why I love this place. The guns n ammo crowd, gold bugs, tin foil hat wearers, and Goldwater-ron Paul worshiping daytraderz all congregAte here.
Please take your pseudoscience over to mish's site; it fits in better with the art bell feel of his crowd.
I call a short term rally. I'm not standing out as a market leader. The end.
In equities? Sure. Might run out to March-April in a broader sense. Look at that big hump in 1929 about 180 days out people were noting this morning.
It's gonna take a minute for the real economy to take stock of its nutshot and drop to its knees as second order consequences kick in.
Also, I think that the Treasuries gotterdammerung could start really any day now, I'm not just bringing it up to be gloomy.
I have seen alot of talk about a rally comming soon.
Its been nearly unanimous in its call.
In addition to the usual suspects like every pundit on TV, you have bears like Mish, Housing Panic, and even Schiff conceeded we may have seen the stock market lows..(at least in nominal terms)....
My question is....if nearly everyone has presumably bought in anticipation of this comming rally.....why hasn't the rally started in earnest already. We've been treading water for some time. (We went into December at 8800 on the DOW, and hear we sit).
What if you threw a party and no once came?
Who exactly is supposed to come into this market now that presumably everyone who thinks the rally is coming has bought?
I frankly don't think there is as much "money on the side" as everyone thinks.
I know alot of co-workers who contribute to the market. No one, and I mean no one, sold. I am the only one I know of who went all cash.
Thoughts?
I got a "Happy Fun Ball".
Comrade Tech Sargent Chen | 12.18.08 - 1:50 pm | #
Do not taunt Happy Fun Ball.
"It's gonna take a minute for the real economy to take stock of its nutshot and drop to its knees as second order consequences kick in."
LOL B_R.
12th Percentile,
There is a point at which the established rich cannot afford us to question - we are close now - want to dare me lower ?
....Geeze - I was having a good day, too!
"The last Black Swan event?"
"You can sort of compare [the situation] to a gas stove," Raeder said, "If you turn on the gas and you light it right away, nothing will happenthe gas stove will go on and there will be a flame. But if you turn on a gas stove and you don't do anything for a while and then you throw in a match, what will happen? It will say, Boom!"
I here you badgerboy but read the National Geo article. Here's the excerpt from some physics professor nut job who helped model the simulations. This is what got my attention:
The models showed that the likely driver is north-facing field lines connecting with Earth's magnetosphere, said Jimmy Raeder, a physicist at the University of New Hampshire in Durham who helped build the simulations.
As a field line approaches, it latches onto the poles and wraps around the planet like an octopus using a tentacle to snare its prey, he said.
The latching, known as magnetic reconnection, tears huge cracks in the magnetosphere and allows solar plasma to leak in.
"We have other observations from other satellites that this reconnection process happens over the poles at times, but we had never appreciated what it actually does," Raeder said.
A thicker layer of solar particles, however, isn't enough by itself to create geomagnetic troubles for Earth.
Right now the planet is enjoying a period of low activity called solar minimum. But particles have been building up inside the magnetosphere as the solar wind carries northward-facing field lines to Earth.
During the next solar cycle, the winds are expected to carry southward-facing field lines, which connect with the magnetosphere in such a way that they provide extra charge to any plasma inside the shield.
"You can sort of compare [the situation] to a gas stove," Raeder said.
"If you turn on the gas and you light it right away, nothing will happenthe gas stove will go on and there will be a flame.
"But if you turn on a gas stove and you don't do anything for a while and then you throw in a match, what will happen? It will say, Boom!"
U.S. commandos get U.N. go-ahead to hunt pirates on land
JS was unusual insofar as his take wasn't driven by an agenda which the data was made to subsequently fit, like Marx, Friedman, Keynes, etc.
Maybe that's why his ideas and projections have held up so well.
bgates
What?
An economist trying to employ scientific method?
Insanity! I don't believe it for a moment.
"It's gonna take a minute for the real economy to take stock of its nutshot and drop to its knees as second order consequences kick in."
Just reading that gave me that uncomfortable, hollow, cold feeling and made me want to assume the fetal position and whimper. Thanks a bundle.
Do not taunt Happy Fun Ball.
Eric | 12.18.08 - 1:58 pm | #
If Happy Fun Ball begins to smoke, get away immediately. Seek shelter and cover head.
"U.S. commandos get U.N. go-ahead to hunt pirates on land."
Let's hunt some orc.
10 yr @ ~2%
30 yr @ 2.5%!
Let's hunt some orc.
Uruks.
ac writes:
Insanity! I don't believe it for a moment.
Then, we agree.
"As a result, Standard & Poor's Ratings Services is expecting an increase in the number and severity of CMBS downgrades in 2009"
I read that equities rated "sell" out perform those rated "buy." Close to a botoom?
Tin,
That sealed it I'm going down to brazil, uruquay and Argentina in Feb..
One more time partying on the beach for this white boy...Any later and I would be coming back like an Emeril blackened Cajun dish
Commercial real estate is way overbuilt. Stupidly so. I live in the NYC metro area and I'm literally tripping over retail and commercial space.
Home Depots, Loews, Staples, Office Depot, Walmarts, Costcos, Dicks, car dealerships, restaurants, self storage, etc. It's insane. Miles and miles of retail lining both sides of Rtes. 22, 10, 1, 17, 4, 124, 3, 9, etc.
All supported by an aging and tapped out middle class with declining real incomes.
I'm short vanity and long free time.
Are we on the threshold of a Misean Crack-up-Boom?
Let's hunt some orc.
Assume Crash Positions!
Cheaper, if you could stop plundering Orc country.
manja_cake writes:
Are we on the threshold of a Misean Crack-up-Boom?
Children pretend - grown ups play for keeps.
SOMALI PIRATE CHIEF: whoocouldanode.
donna writes:
I long ago determined that every democracy grows up to be socially democratic in the end.
Time for America to grow up already, and give up the fantasies that we are all so individually superior that we don't have to take care of each other.
donna | Homepage | 12.18.08 - 1:40 pm | #
I would have opposed this when I was young, and captivated by Ayn Rand. She often referred to a "fallacy of the stolen concept" in epistemology, and that had a big effect on me. But in the field of political philosophy, I think she committed an analogous error, of co-opting the unearned, a "fallacy of the stolen socio-economic context". I did not begin from ground zero, reinventing the wheel. My efforts were made standing on a ground that was prepared for me and maintained by the labor of others. I think it is an enormous hole in her system to consider that a "given". She was a great thinker, yes. But this reminds me of a quote I saw today: Embrace those searching for truth; flee from those who've found it. Vaclav Havel.
So, I accept your argument.
Popeye speaks to short term trends. I am not long term smart. My job is to transfer your dollars into my pocket. Let's not forget that.
Credit Suisse is giving out their dodgy illiquid assets as a part of their executive bonus packages.
This is truly clever!
Credit Suisse to Use Illiquid Assets to Pay Bonuses (Update1) - Bloomberg.com
I love it how they the narrowed loss...Don't they have a 13 run rule or anything?
Amazing they are around...
LEN 10.13, -0.12, -1.2% reported a net loss of $811 million, or $5.12 a share, narrower than its loss of $1.25 billion, or $7.92 a share, in the year-earlier quarter. The stock was down more than 1% in afternoon trade.
" TJ writes:
Credit Suisse is giving out their dodgy illiquid assets as a part of their executive bonus packages.
This is truly clever!
Bloomberg.com
ne...refer=worldwide
TJ | 12.18.08 - 2:10 pm | # "
Does this constitute a "market," kicking assets out of Level 3 limbo?
yagij writes:
ForEx Question: USD is up and up against the JPY. Did the BoJ finally get around to sinking their currency again?
yagij | 12.18.08 - 1:28 pm | #
U$D/JPY has had five 200 point rallies in 30 days and is just back to the parabolic fall line.
"I'm quickly becoming impressed with this Schumpeter guy"
Jas is a very bug fan.
"I call a short term rally."
So is everyone else...
Popeye calls a short term rally. Get out of the way or be prepared. It's going to happen; like it or not.
I've got my rally cap on. Shark fin style.
Oh great,
Here we go with Covered Bonds being pumped, in anticipation of massive GSE pools of liquidity being prepped for a tsunami of GSE/Fannie swapping and substitutions, pushing the old peas under new shells and re-packaging fraud loans that are being put into short term bills, while these Covered Bond entities are placed into position to become Giant Depends-like Tampons:
The rating action is taken as a result of a completed review of documents relating to the transfer of the program from Washington Mutual Bank (WMB) to JPMorgan Chase Bank, National Association (JPM) whose Long-term Issuer Default Rating (IDR) is 'AA-' by Fitch, a revision of WMCBP's Discontinuity Factor (D-Factor) to 100% from 24.6%, and the contractual minimum overcollateralization (OC) of 49.3% between the cover pool and the covered bonds.
Credit Suisse is giving out their dodgy illiquid assets as a part of their executive bonus packages.
How are the assets being valued? Mark to model or Mark to market?
REBear,
There is a point at which we join forces - pick a number.....
I think you catch my point.
I want my revenue back! I'm a taxpayer damn it!
We cannot end up like Japan--they manufacture and export more than they consume, we just consume. Keeping their currency cheap helped them, will destroy us. We will never get out of the hole being dug--and secretly, or openly, we know it. The empire has been destroyed in 28 years--Reaganomics is the cause of death.
"How are the assets being valued? Mark to model or Mark to market?"
Wouldn't the fairest solution be to give each banker a full bonus with the assets marked to face-value or par or whatever produces the highest current valuation? That way, the degree to which the bonus turns out to be lower than what the banker expected to earn will be the same as the degree to which the assets failed to perform as promised.
OT but just heard on CNBC that the NAIC (National Assn of Insurance Commissioners) is recommending that life insurance carriers (read Met Life, etc.) be allowed to have looser limits on capital reserves so that don't have to have quite so much on hand to cover losses.
Don't everybody die at once.
donna writes:
I long ago determined that every democracy grows up to be socially democratic in the end.
Time for America to grow up already, and give up the fantasies that we are all so individually superior that we don't have to take care of each other.
donna | Homepage | 12.18.08 - 1:40 pm | #
I'm all for that, but the question is how and if it can be done in practice in the way that people visualize.
It's all well and good to say that we should do this.
My fear though is that we're going to create a system based on what we should do and not what we are willing to do.
If we attempt to base our economy on a theoretical human nature that doesn't exist, then I think that economy will fail.
Credit Suisse Group said Thursday it will use its own illiquid assets such as mortgage-securities to pay senior staff at its investment bank year-end bonuses.
Now we have two things to be grateful to Credit-Suisse for:
I've said my peace. You are smart enough to have picked up on it or not.
Think for yourself. Trade well.
My only point is - I'm surprised that NOTHING is being done for the big three given the $2T given to Wall St.
They see BK'ing the Big 3 as a way to destroy a major union. It's no more complicated than that.
What the public wants in this case is irrelevant, just as it was irrelevant when the equally unpopular $700 billion was passed. Let's not pretend that the views of the average guy matter.
"Popeye calls a short term rally."
conventional wisdom.
IMO, the convincing bounce off of 920 is bearish. I also expect retail and jobs to surprise on the down-side. Mr. Market has also not priced in Bush's orderly bk. When has any bush plan turned out to be orderly?
This may be the fundamental mechanism by which economies grow old and die
Why would the companies themselves matter? The land, buildings are the same.
I suggest that it's a proxy for what really happens.
...or that they matter in determining current policy in Washington , I should say.
Popeye...Dude....seriously we get that you think a rally is coming.
Popeye writes:
Think or die - how much more can collapse ?? Logic works if you give it a chance.
Popeye | 12.18.08 - 1:35 pm | #
Overlay the DJI 2007 top on the 1989 NIK top (10 year charts) and the possibility of DJI 4000 pops right out.
Yahoo will show it but it won't link.
A poor man's Yoda.
ew thread
What the public wants in this case is irrelevant, just as it was irrelevant when the equally unpopular $700 billion was passed. Let's not pretend that the views of the average guy matter.
Truer words have never been spoken. Anyway, nothing to see here folks, move along...
My job does not include converting any of you to my view of the market. I will take your cash at such times as I deem appropriate, but y'all buy into whichever fiat currency as meets your fashion.
Popeye calls B.S. on all of you. You are all sleep walking.
You are all sleep walking.
That 'lil sweetheart Louise says Dow 6400. I take her advice. She is part japanese and vows seppuku if wrong.
You may have my topknot if does not come to be...in 30 years.
popeye,
What's short term rally? 1-2 months?
thanks.
"Does anyone know if there is typically a surge in layoffs after the holiday when times are bad?"
After the "1/1s" (January 1st big insurance renewal date) for insurance, the insurance companies and big brokers likely to cut.
Re: My only point is - I'm surprised that NOTHING is being done for the big three given the $2T given to Wall St.
I think you also have to realize that the BIG three are a BIG part of Wall Street banking with ABS-related to derivatives, so the Wall Street bailout does flow into these ABS IMHO.
What will the impact to the Life Insurers be?
"(the IBs) pay themselves more than their firms are worth and then default on their debt obligations."
The public 'tell' on this one came when Lehman went down: employees could have pooled last year's bonus money and bought the entire firm on the cheap, but they did nothing.
"How are the assets being valued? Mark to model or Mark to market?"
Mark to Madoff.
sdtfs writes: "I'm surprised no one has figured how many cars we're going to need and how many factories it will take to produce that number."
A similar exercise could be performed for the number of loans, IPOs, SIVs, and so forth that we will need, and the number of investment banks that it will take to produce that number.
Although, come to think of it, there is an asymmetry; the car factories keep making cars, even though no one is buying, but the banks show no signs of making loans even where there is demand.
REBear writes: "How are the [Credit Suisse bonus] assets being valued? Mark to model or Mark to market?"
That is undoubtedly the question that the income tax people are asking.
It seems to put the executives in a dilemma; claiming the assets are worth a lot means they have a large personal tax liability, but reassures the market about the firm's health; while the opposite does, well, the opposite.
ac writes: "If we attempt to base our economy on a theoretical human nature that doesn't exist, then I think that economy will fail."
This explains everything. Our economy is based on the assumption that humans are rational; yet experiments show that humans do not behave rationally, in even the simplest sorts of economic games.
(Big 3 thread)
I'm still wondering why a bailout from the Big 3 by oil companies hasn't happened? Oil companies have made a mint off of American car companies, it'a relationship that's gone back decades.
A few of the above comments argue that financial assets were considerably overvalued. This isn't suprising since even hard assets (like cars) are still being overproduced.
This is rhetorical, but how many people here really think a loan to Big 3 actually will make them solvent? GM has over $100 B in loans coming due in the next couple of years....